Detroit’s lead bankruptcy mediator ordered the city and bond-insurer Syncora Guarantee Inc. into talks in their dispute over a proposed $253 million swaps settlement, Bloomberg News reported yesterday. The city is seeking to buy its way out of an interest-rate swaps contract to save about $50 million a year, a proposal that Syncora asked a bankruptcy judge to reject when it comes before the court next month. The mediator in the case, U.S. District Judge Gerald Rosen, ordered Syncora, the city and swaps holders including Merrill Lynch Capital Services Inc. to meet with a bankruptcy judge from Oregon to try to settle their differences. After Detroit filed the biggest-ever U.S. municipal bankruptcy last month, the city’s emergency manager, Kevyn Orr, asked the judge overseeing the $18 billion case to approve the settlement with Merrill Lynch and UBS AG. Syncora, which sold insurance on the swaps, opposes the settlement, claiming that ending the contract too early could hurt its economic interests.
